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Flashcards in Employment Income Deck (35):

Employment Income Pro.

Benefits in Kind


Expenses "wholly, exclusively and necessarily incurred"
Occupational pensions schemes
Contributions to a payroll giving scheme
Professional subscriptions.


Allowable deductions

Take away allowable deductions from total taxable earnings to get met taxable earnings.

Allowable deductions cannot exceed total tax earning


Expenses occurred by employees are deductible when...

Employee is obliged to pay the expense

The expense is wholly, exclusively and necessarily in the performance of the duties of the emp.

Professional subscription fees

Proportion of expenses if required to work from home.

Necessary tools, uniforms, protective clothing.


Travel expenses deductions

Travel between work and home is not allowable

Can deduct travel and substinence between performance of their duties.

No normal place of work - then home to work is allowable. Eg client consultancy work.

If home is work locations.

Home to temporary workplace of no more than 24 months is allowed.


Entertaining expenses

If it is reimbursed directly then you include it as The salary and then minus from the salary

If it is specific entertaining allowance then include it as income and then deduct it from the income.

General allowance
Include as salary


Taxable Expenses

Professional subscription of 450 to CIOT

Allowable deduct full 450..

100 subscription to golf club for entertaining clients

No deduction not necessary for employ!!!

200 general round sum allowance of which 150 spent on entertaining

No deduction - full 200 will be spent on employee

250 for new suit - no deduction

100 specific spent on 80 Enter - 80 deduction


Statutory Mileage Rate Scheme

Employees volunteers using car bike van for business travel..

The excess from the statutory rate is taxable

Are less than the state rate

Then it's an allowable deduction!!!


Statutory Mileage Rate

Car / Van 45p for first 10000 miles

25p after

Motorcycle 24p per mile

Cycle 20p per mile

Additional 5p per passenger


Mileage Allowance

Mileage Allowance

Car 47p 14000 business miles

47 * 14000 is 6580

Take away 4500
25 per mil 1000

It's always the amount reimbursed

Less the statutory allowance.


Mileage allowance

If it's positive it's a taxable benefit it's it's negative it's an allowable deduction.


Employee Loans

This is calculate the taxable benefit when there are loans made to their employees which are below the official rate of interest.


Employee loans - Average and strict method

Strict Method:

Amount of loan * number of months * 3%


Interest Paid - amount of loan * no. of months * interest rate

Average method

The amount of the loan at the start of the year less the amount of the loan at the end of the year / 2 * 3%.


What's the difference between the average and the strict method

The strict method is more exact. They both subtract the interest actually paid but the strict method has a more precise method.


Emoloyee loans - no taxable benefit when

The employee loan is less 10,000.

Loans made on normal commercial terms


The assets transferred to employees

If an employer purchases a new asset and gives it to an employee immediately the employee is taxed on the cost of the asset.
When the employee has use of the asset and is then given the asset the benefit is the-
Higher of market value when gifted Market value when first provided.


The assets transferred to employees

Market price when gifted
Market gift when first provided
Less benefit already taxed..


The assets transferred to employees- car/van/bike

The benefit is current market value less employee cont.


The assets transferred to employees - Q's.

Market value when first provided
Less market value * 20% * pro rate if necessary.
Whe the employees has paid for anything subtrt.


Taxable Benefits- Revision

Living accommodation-
If the ER rents the property the benefit in kind is valued at the higher of

Rent paid by the Employer/
Annual Value(told in the question).


Taxable benefits-when the employee owns the propert.

The benefit in kind is the Annual Value of EXPENSIVE
Cost + capital expenses > 75,000


Less 75,000

Excess * ORI

Market value if more than 6 years between move in date.


Car benefit

Benefit =manufacturer's list price
* CO2 emissions


Car benefit - list price

Includes optional extras when originally bought

Deduct any capital contributions made 5k


CO2 emissions %

95 grams 14%
Additional complete 5%

Round down to nearest 5g/km
3% supplement for diesel cars



CO2 Emissions

Lower rates for qualifying cars-.



Deduct for Employees private use

No car benefit for pool cars

Benefit covers the running costs of the car including insurance, maintenance and road tax.

Time apportion benefit for part availability

Unavailable periods


Car Benefit- Fuel

Fuel benefit

Benefit = the CO2 emissions * 22100


Car benefits- fuel

No deduction for employee partial contribution towards fuel.

If employee pays for the cost of the private fuel there isn't taxblebenefit.


Assets lent for PU.

Employer owns the asset-
Benefit - 20% * market value

Employer rents the asset
Benefit higher of 20% * MV
Rent paid by employer


Childcare payments

Exemption available if employer contracts directly with or provides vouchers for an approved child carer.

Amount of exemption depends on when the employee joined the scheme.

Employee joined pre April 2011

Up to 55 week exempt

Employee joined on or after 6 April 2011

55 week exempt basic rate

Higher rate 28 week exempt

Additional rate 25 week.


Living Expenses.

In addition employees taxed on living expenses

Heat and lighting

Benefit is the cost to employer less the employee contribution

Furniture benefit is the use ofasset rules...


Living expenses

Add back on the living expenses and the 20% of furniture.

If the total is more than 10 per cent of total taxable earnings- the lower of 10 per cent of total taxable earnings or the total expenses!


Car expenses - Employee

No Private Use deductions for Employees unless the employee ACtuLLY pays for the private use.


Client entertaining

Have to add on the entire amount of the round sum allowances for the client entetaining- not allowed round sum allowances!


Travel to and from work-permanent workplaces

If it's a permanent workplace it's not deductible


Taxable expenses - Property Income

Property income less expenses-mortgage interest and agent fees